When do you lose your deposit when buying property in Malta?

A deposit is a two-way commitment

As Dr. Laferla explains, the deposit is "paid as a form of commitment of the buyer," and in return "the vendor… is committing himself by reserving the property in favour of the purchaser" — he can no longer sell it to third parties. The Konvenju strikes a balance: the buyer shows commitment with money, the seller by taking the property off the market and locking it in the buyer's favour. The deposit is customarily 10% of the price, paid when the Konvenju is signed.

When you actually risk losing it

The deposit is at risk, in Dr. Laferla's words, when the purchaser "decides not to proceed with the final contract… without a valid reason at law." A simple change of mind is not a valid reason. Walking away from a binding promise of sale with no lawful basis is what exposes the deposit to forfeiture.

What counts as a valid reason at law

A Konvenju is normally signed subject to protective conditions. If one of them fails, the buyer can usually withdraw and recover the deposit:

• A refused bank loan — where the Konvenju is made "subject to sanction of loan," a refusal lets the buyer withdraw and recover the deposit.
• A defect in the title — if the notary's searches show the seller cannot give clean title, or the property carries undisclosed debts or hypothecs.
• Missing permits — if required planning permits turn out not to be in order.

Absent a recognised reason like these, abandoning the purchase puts the deposit at risk.

Forfeiture is not automatic

Even where the buyer walks away without a valid reason, the seller cannot simply keep the deposit. Under Article 1357 of the Civil Code, the seller must follow a procedure: file a judicial letter before the Konvenju expires, file a sworn application within 30 days of expiry, and obtain a court order confirming the buyer had no valid reason to refuse. If the seller misses these deadlines, the deposit must be returned regardless of what the contract says.

Sources

• Dr. Michael Laferla — Yitaku Asks video (deposit as mutual commitment; loss without a valid reason at law)
• Civil Code of Malta, Chapter 16 — Article 1357 (promise of sale, deposit on account of the price, forfeiture procedure and deadlines)
• Central Bank of Malta Directive No. 16 (borrower-based measures) — 90% loan-to-value underpinning the customary 10% deposit
• Maltese notarial practice — 10% Konvenju deposit; the notary's role in advising both parties